Because I Said So

Just when world markets were seeking assurance, our esteemed and supremely qualified leader uttered this:

"Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country," Obama said.

Nothing quite like living in FantasyLand. I hear it's particularly beautiful at this time of year.

How are you feeling about your gold and silver today? Let's see...Dow is down 506. The S&P is down 66. Crude's at $80. Copper and the grains have been pummeled. I know that silver is pissing you off but, considering the absolute demolition of everything that isn't gold, you should actually feel pretty good about it.

Speaking of silver, here's a 2-hour chart. When the selling of everything finally relents, silver will rally sharply. It will carry through 40.40 and it will move rapidly toward the highs of last week near $42.

However, gold is your clear, hands-down winner on the day. I have a last of $1714, up an amazing $62. There's more to come, too. First up, here's your 2-hour chart. It shows another "stair" higher.

More significantly, I've tried to recreate Trader Dan's weekly chart. Notice the clear breakout of the three-year channel. If it can hold in this area and extend gains...and it's hard to see why it wouldn't...a breakout of this magnitude is extraordinarily bullish. I can see why JPM came out with their "$2500 gold by year end" prediction today.

Three years is an awful long time so we must be careful. Gold could easily fall back into the channel and give us a "false breakout". However, the fundos are so strong at present that it may very well stay up and begin a rapidly accelerating extension higher. Watch this very closely as we may be about to be given a once-in-a-decade opportunity to make big fiat, real fast.

Lastly, I did switch a few things around today in order to take maximum advantage of what I see coming. In silver, I eliminated my Sep spreads and am now simply long the $42 calls. In gold, I dumped my October 1700 vs 1800 spreads and went long just the straight 1800 calls. I'm still long my December 1700 vs 1800 spreads, though.

Thanks to all who entered the new contest. If you haven't entered yet, you must pick the Comex closing price for this coming Friday in the September11 gold contract. Use the previous thread to post your guess. No entries submitted later than 5:00 EDT today will be accepted. Btw, if someone has a few extra minutes, would you please help The Turd by compiling all of the entries onto a spreadsheet? Thanks in advance to anyone who can help.

That's it for now. Keep the faith! TF

5:10 pm EDT UPDATE:

As the Globex closes, gold is back to $1722. I can't imagine that it won't make new highs overnight, particularly when Asia is in full swing at around midnight to 2:00 am EDT. For your comic relief, I present below something I just received from a friend. It's the opening paragraph of a "SPECIAL BULLETIN", just released by MSSB. What absolute fools these people are. They can't even spell "committee" correctly! If you are currently working with a traditionally-trained "financial advisor"....well, you know what they say about a fool and his money.

Applegate, Jeffrey – Morgan Stanley Smith Barney

August 8, 2011 6:37 PM GMT

The downgrade of US long-term debt by Standard and Poor’s, which is notable politically and historically, is having a prompt and negative short term effect on global financial markets. However, the next stop is not a recession—nor is it a drop in corporate profits. This a split decision on ratings, as the other two major ratings agencies, Moody’s and Fitch, have maintained their respective top-drawer ratings for US debt. As this latest sell-off abates, expect the markets to refocus on the fundamentals: an intact global business-cycle expansion that in our view, should deliver double-digit profit-growth into 2012. Our base case remains that a US economic rebound will occur in the second half of this year and that European policymakers will eventually be forced to take more decisive action to stabilize their debt markets and the euro.

11:25 pm EDT UPDATE:

These late nights are wiping me out. Holy cow, gold is up another $42 as I type at $1755! The S&P is down 28. Crude is down another $4. The grains and copper are getting smoked. At least silver is hanging in there at 39.12.

Two things. Watch gold overnight. Santa's number of the final frontier is 1764. For whatever reason, his numbers usually pan out and he's maintained for weeks that 1764 would be defended by The Cartel. In silver, watch this triangle play out. Silver could collapse through 38.50 and head toward 37 but I doubt it. I expect silver to instead charge through the down-sloping line overnight and begin heading higher. We'll see. Anything can happen. Have a great overnight. See you in the a.m. TF

I think it is safe to say that the slope of this secular gold bull market has now changed. The higher low in early July was the suggestion and I think the breakout these last trading days confirms it. Be wary if your trading however. Remember, this tried to run in 2007. We might see gold caught in the wash once global commerce contracts again, but for long timeline buyers this breakout is a safe entry. Sure, you might see sub $1700 again in the near future, but 3 years from now it won't matter.

Under the circumstances - Silver is fighting hard - especially when you look at the chart Turdle posted and see all the serious red(eyed).

And especially with the significant difference in margin requirements between Gold and Silver? (if i have that right?)...Someone mentioned Gold is only 3.8% - and what is Silver? - over 12%? I'm not a trader so i hope that makes sense - but to me - that means Silver is hanging in tough...

I'm worried about Gold going up so fast... again based on the information provided.

I think, though, it'll happen during COMEX hours tomorrow along with first the rumor, which will start the selling and then the actual announcement of a margin hike. At that point we'll know what we have in this gold market. If the price does not tank in the face of a stiff margin hike at Santa's "Phase 3 Angel" then this thing goes plaid before our very eyes.

I'm preparing for a burst higher on the open then an epic sell-off. I am trying to get myself prepped for whatever happens and have some kind of game plan for it.

@ CALIFORNIA LAWYER I liked your last post. Do you follow Webster Tarpley at TARPLEY.net. Says a lot of the same things about the depression but he is not an Austrian Economist and is very pro trade union. His political connections and war comments are very interesting.

During a paper currency bonfire, it makes sense that the miners would lag the above-ground physical price movements. For below-ground ore to transform to above-ground stock, commerce must be intact. When currency burns, commerce contracts! Currency is the commerce transmission mechanism, the exchange medium. One saves in gold, one buys, sells and trades in currency. Understand this difference and you understand why the miners lag the price. Understand this difference and you understand the sea-change happening before you. The West has been misled to save in currency! 401Ks, Roths, Pensions, Insurance, SS, Medicare/Medicaid/Obamacare, etc. All commerce-based and therefore currency. Paper burns and we awaken from that dream.

The London open is going to be wild. BTW, Silver is looking to break out of a big triangle on the 1 hour chart that is as clear as day.... the BO level right now is around $39.20 (Sept). That drops into the $39.15 range next hour. I think a break out of that triangle will launch us towards $40, esp. with the USD breaking down into the 74.70 region.

Cef holds substantial amounts of Silver in its vaults. This is why it was not doing well by end of day. Unfortunate but true. You might check out GTU, the Central Gold Fund of Canada. It tracks gold quite well and holds all of it in its vaults. Or SGOL.

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